Wednesday, December 03, 2008

Wong right to put off our targets

Much to the chagrin of greenies, Penny Wong is delaying issuing Australia's emission reduction targets until after this month's Poznan meeting on climate change, and any targets in the forthcoming Australian white paper will not be definitive.

Doubtless this policy drift is a recognition that the world has changed with the global downturn.  The Climate Change Minister would also be aware that two of our main trading partners, Japan and China, are taking minimal action to reduce their emissions.

This means any Australian measures would constitute an empty and economically debilitating gesture.  But with several ministers sitting in green, inner-city electorates, Wong has to be wary of moving too fast and inviting headlines such as this in The Sydney Morning Herald yesterday:  "Australia squibs on climate promise".

The Kyoto agreement committed industrialised countries to reduce their CO2 emissions by 5.2 per cent from 1990 levels for the period 2008-12.  Organisation for Economic Co-operation and Development countries have incurred considerable costs in subsidies to renewables and energy use regulations, yet their 2005 emissions were 20per cent above the 1990 levels.

Despite this and notwithstanding that the first tranche of cuts is likely to be the easiest, the Australian Government, like many others, is proposing developed country emission reductions of 80 per cent by 2050 to stabilise CO2 in the atmosphere.

The European Union is particularly vocal in support of climate measures.  Australia and the US under president-elect Barack Obama are newly committed to additional measures to reduce emissions.  Australia has a stream of reports advocating action to reduce emissions from economist Ross Garnaut, Wong and Treasury.  Obama has maintained a strong rhetoric in favour of forcing reductions in US CO2 emissions, suggesting this as a route to reinvigorating the US economy through the creation of five million "green-collar" jobs.  He argues that the world financial meltdown adds impetus to the need to take actions that include placing penalties on carbon emissions.

Actually, it would be unprecedented for new cost impositions to bring a net increase in jobs.  Though overlooked by many key policymakers in Western countries, this is well understood in the Asia-Pacific area, which George W. Bush noted is displacing the Atlantic area as the centre of the world economy.  Japan and China are the two most important members of this emerging re-positioning of the world's economic centre of gravity.  Both have entirely different agendas from that of the dominant bloc of Europeans, soon to be joined by the US.

In response to climate change issues and its own deficit in fossil fuels, Japan has a vigorous nuclear program that provides 30 per cent of its electricity.  The Japanese Government wishes to accelerate this but is hampered by NIMBY opposition.

Compared with its Kyoto target of a 7 per cent reduction in CO2 emissions, Japan has announced its outcome will be an increase of more than 8 per cent, even though its economy has been in a recession for much of the period since 1990, when the Kyoto base was set.  Japan has focused exclusively on voluntary emission reduction measures.  It rejects any other measures, maintaining that in terms of output to carbon emissions it is a world leader due to the inherent efficiency of its manufacturing and the relatively small size of its houses.  The Japanese were stung by derisive comments in the Western media on this latter matter.

Japan's present level of per capita CO2 equivalent emissions is 9.9 tonnes -- Australia's is 16 tonnes -- and it has no strategy to reduce this to the three to four tonnes per capita necessary to stabilise emissions at the present 550 parts per million.

China has recently become the world's largest source of CO2 emissions and it, too, is adamantly against taking action to force reductions.  Chinese emissions are now four tonnes per capita and will more than double in the next 20 years.

The Chinese Government forcefully maintains that global warming will affect China particularly adversely, although International Monetary Fund data indicates the country would be less adversely affected by warming than most others.

Beijing's statements may be made with one eye on those Western leaders who threaten penalties on countries that are not committed to taking emission abatement action.

In a recent white paper, China identifies a "kitchen sink" set of emission-reduction measures it claims to be taking.  Of most significance is a subsidised wind program.  Even this has an industry development dimension; all wind generators must have more than 50 per cent Chinese content to qualify for subsidies.

The bottom line is that for all the concern China expresses about the adverse effects of human-induced global warming, it has no serious emission-reduction plans.  Economic growth takes precedence and there is no suggestion that this is possible without carbon-based fuels.  China's chief carbon reduction initiatives involve "co-benefits" of increased energy efficiency and lower levels of pollution.  In neither of these cases are ambitious goals being set.

China's white paper stresses adaptation to climate change and advocates an adaptation fund financed by developed countries.  It also focuses on cumulative levels of emissions, which legitimise developing countries out-emitting the developed world in the years ahead.  In addition, China is seeking to use climate change as a catalyst to provide technology transfer.

The two leading Asian countries will continue to advocate lower levels of CO2 emissions but neither will undertake measures to reduce their own levels.  This lays the ground for policy conflict, perhaps threatening the world trading regime, should the Western nations insist on emission reduction actions rather than just rhetoric.

It certainly makes it prudent for Australia to delay taking early action to penalise domestic energy supplies.


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